In fact it is so great at illustrating the situation, I don’t know how anyone can think inflation is not a major concern.

This nation imports nearly half of its oil. Imports just about everything we use in our daily lives and with a weak dollar, those things become more expensive.

I agree that the downside to the dollar is limited because the other world currencies aren’t exactly in great shape either, but it will fall, perhaps to 60 to 65 on the dollar index.

In conjunction with the u.s. government printing money to pay its bills and to pay the unemployed and to pay retirees and to pay for those “too big to fail” and to pay for the cost of being the worlds policeman and to pay for the cost of everyday government, deflation is a myth.

As the dollar continues to fall and interest remain near zero foreign holders will buy less new dollars (that’s all that needs to happen to create a dollar collapse) or God forbid, actually start selling their holdings, those dollars that use to be soaked up will add to inflationary pressures.

I have no doubt some prices are declining but the only prices that are declining were things involved in bubbles, specifically housing. And things made in Asia are declining due to massive excess capacities.

Those two categories are temporary in price declines.

Any good or service made here in the u.s. is still increasing, the easiest to illustrate is health care. How about insurance? Your food bill? Banking costs? Credit card fees? Barber/Hairdresser? Pet Sitter? Car repair?

The Fed is at war with savers and will bail out debtors (especially the Federal Government) at all costs.

If the Fed actually wanted inflation what would they tell the public and the financial markets? It would seem to me the best thing they could say is “We need to be concerned about deflation so we need to print. If we are lucky we will succeed in stopping deflation and create a steady inflation rate of 1 to 2%”.

I don’t think the Fed would every say, “Our Countrymen are in debt to Foreigners and our economy is suffocating from this debt. We will do our best to create an inflationary event that will inflate 65 to 75% of real debt away. The Central Bank will do this in an orderly fashion so that a moderate rate of inflation of 5 to 6% over 10 years will achieve this. Those Americans with savings or holding debt instruments will need to suffer for the good of our SpendThrift Countrymen”.

Even the FAKE CPI that always understates inflation will be able to hide the inflation that is coming. By the end of next year there will be no doubt in anyones minds that you can’t just print money endlessly.

By the time people realise inflation is here, places to park your wealth will have become exceedingly expensive.